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OPEC Production Cut Scenario Analysis

Feb. 23, 2024

As we approach the next OPEC meeting on April 3rd, a survey released Friday (Feb 23rd) by Bloomberg, indicated oil industry participants and analysts are betting OPEC+ will extend production cuts beyond the first quarter of 2024.  Of the 17 traders and analysts surveyed, 14 of them expect that OPEC+ will not make any changes to its current production plans in the coming quarter.  The rationale for keeping production plans stable is that crude production has been above the demand levels since the beginning of this year and OPEC+ has had to keep oil off the market in order to ...

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Brief Red Sea Scenario Analysis

Jan. 26, 2024

The tensions in the Middle East have driven up the risk premium on crude prices.  There is concern that military clashes between Israel and the Palestinian Islamist group, Hamas, could escalate into a broader regional conflict, with markets worried the conflict could expand and disrupt wider Middle Eastern supply.  Given the uncertainty of the situation, we look into a few potential scenarios and discuss changes in tanker demand.

In the scenario where the Red Sea choke point is completely shut down due to continued attacks, our scenario analysis anticipates owners to reroute around the Cape of Good Hope, significantly boosting ...

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Libya’s Force Majeure

Jan. 12, 2024

Protests in Libya continue to keep approximately 300,000 b/d of supply off the market following the shutdown of Libya’s largest oil field last week.  The shutdown could weigh on January Esharara exports from the Zawia terminal.  Prior to the force majeure, Libyan oil fields and terminals have enjoyed a relatively disruption-free 12 months, making last year's crude exports the second-highest since the civil war in 2011.   However political instability has been recurring since the overthrow of Muammar Gadaffi over a decade ago and now threatens the country’s exports headed into 2024.  The recent shutting of ...

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OPEC vs Non-OPEC – The Upcoming Year

Jan. 5, 2024

The new year has the potential to feature a shifting dynamic between OPEC and non-OPEC producers.  OPEC+ garnered much attention with significant production cuts during the course of 2023.  The de-facto leader, Saudi Arabia also extended their voluntary cut of 1 million b/d that had previously been announced in June.  They cited weakness in oil prices driven by financial speculators and also concern over the forward-looking economic outlook as part of the rationale.  This sets the stage for more geopolitical volatility headed into 2024, usually a good omen for tanker owners.  To this effect, the markets will also be ...

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Developments in the Red Sea

Dec. 15, 2023

Shipping and logistics majors A.P. Moller-Maersk and Hapag-Lloyd have ordered their ships to bypass the Bab el-Mandeb Strait on Friday after attacks on their vessels.  Maersk said its decision comes after a near-miss incident involving the Maersk Gibraltar on Thursday and another attack on a container vessel on Friday.  An estimated 17,000 merchant ships cross through the Bab el-Mandeb Strait each year (equating to hundreds of vessels per day). 

In evaluating the impact on tanker markets, we draw a parallel to our previous analysis highlighting a Suez Canal closure given that most vessels transiting the Suez also pass ...

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